The invention relates generally to the optimization of logistics to support a manufacturing facility, and deals more particularly with a computer system which determines an optimum frequency of delivery of parts to a manufacturing facility based on transportation, occupancy, inventory carrying, material handling and other costs.
A critical element in minimizing the cost of producing a product is logistics i.e. the manner of obtaining parts for the manufacturing process. Factors such as frequency of delivery, mode of transportation, mode of storage, and manner of material handling significantly affect the cost of production. For example, in many situations it is desirable to order parts frequently and have them shipped directly to a production line as needed ("just-in-time") to minimize storage and carrying costs. However, such a strategy places much reliance on the shipper to consistently meet the schedule, and therefore may require a protective stock and substitute shippers. Thus, there are many factors to consider in comparing the cost of different logistic strategies, and it is critical to accurately estimate the cost of each.
Heretofore, the planning for logistics in the manufacturing organization has been disjointed and different aspects were assigned to different functions within the organization. For example, Purchasing may buy a part based on an economical order quantity, the unit cost, and some measure of quality. However, Production Control may order the part based on "rules of thumb", Industrial and Manufacturing Engineers may plan manufacturing floor space based on peak capacities and average stock levels, Traffic Analysts may consider transportation costs based on an overall average cost per pound and Distribution Space Planners may count on a given quantity of stock at an average cost per square foot. In many cases, these different decisions are made without consideration of the impact to the total logistics cost. For example, the Traffic Analyst recommends full truck load shipments to achieve a low cost per pound. The Industrial or Manufacturing Engineer attempts to reduce manufacturing floor space to accommodate one or two days of stock for the part under the auspices of a just-in-time (JIT) program. This saves manufacturing space and encourages a reduction in inventory carrying costs. The Production Control system sets up for either weekly or monthly orders. Planners in the distribution center or warehouse suggest that the part be delivered directly to the manufacturing line to eliminate their handling charges. If the part is to be delivered to the warehouse, the Planners will recommend that the part be moved in large volumes, because the costs of distribution are based on economies of scale. Space Planners for the warehouse recommend a just-in-time program so that the only parts in the warehouse storage modules are for protective stock. If the warehouse is to be used to store parts, the space planners will drive for low stocking levels, with frequent receipts and disbursements (in small volumes) of the part. While every group does their best to reduce the costs of logistics, the assumptions and conclusions are often conflicting. Also, cost estimation is hampered by disruptions in planned transportation methods.
Accordingly, a general object of the present invention is to provide a process and apparatus which, in a coordinated fashion, determines an optimum, logistics plan for supplying parts to a manufacturing facility.
A more specific object of the present invention is to provide a process and apparatus of the foregoing type which optimizes the ordering frequency based on transportation, occupancy, inventory carrying, material handling and other costs.
Another specific object of the present invention is to identify many significant factors in the cost of logistics, and develop a program and apparatus to accurately consider the costs associated with each of the factors including disruptions in planned transportation methods.